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Tuesday, May 9, 2017

Budget 2017-18 highlights

Budget
2017-18 contains 3 major reforms: advancement of date of presentation, merger
of railway budget with general budget, abolition of Plan and non-Plan
expenditure.

Pace
of remonetization will soon reach comfortable levels; effect of demonetization
not expected to spill over into next year. Surplus liquidity in banking system
will raise access to credit, leading to multiplier effect on economic activity.

Agenda
for 2017-18 is “Transform, Energise and Clean India” through 10 themes:

Farmers : committed to double the income in 5
years; Rural Population : providing employment & basic
infrastructure; Youth : energising them through education, skills and jobs; The
Poor and the Underprivileged : strengthening the systems of social
security, health care and affordable housing;
Infrastructure: for
efficiency, productivity and quality of life;
Financial Sector : growth
& stability by stronger institutions;
Digital Economy: for speed,
accountability and transparency; Public Service : effective governance
and efficient service delivery through people’s participation; Prudent
Fiscal Management: to ensure optimal deployment of resources and preserve
fiscal stability; Tax Administration: honouring the honest.

Fiscal situation

Total expenditure is Rs. 21, 46,735 crore.

Plan, non-plan expenditure to be abolished; focus will be on capital expenditure, which will be 25.4 %.

Rs. 3,000 crore under the Department of Economic Affairs for implementing the
Budget announcements.

The defence sector gets an allocation of Rs.
2.74,114 crore.

Expenditure for science and technology is Rs. 37,435 crore.

Total resources transferred to States and Union Territories is Rs
4.11 lakh crore.

Revenue deficit is 1.9 %

Fiscal deficit of 2017-18 pegged at 3.2% of the GDP. Will remain committed to
achieving 3% in the next year.

Net market borrowing of Government restricted to Rs. 3.48 lakh
crores after buyback in 2017-18, compared with Rs. 4.25 lakh crores of the
previous year.

India’s tax to GDP ratio is not favourable and
there are several anomalies: Out of 13.14 lakh registered companies, only 5.97
lakh firms have filed returns for 2016-17; individuals numbering 1.95 crore
showed an income between Rs. 2.5 lakh to Rs. 5 lakh; out of 76 lakh individual
assessees declaring income more than Rs. 5 lakh, 56 lakh are salaried; only
1.72 lakh people showed income of more than Rs. 50 lakh a year; between
November 8 to December 30, deposits ranging from Rs. 2 lakh and Rs. 80 lakh
were made in 1.09 crore accounts.

Proportion of direct tax to indirect tax is not
optimal.

Under the corporate tax, in order to make MSME
companies more viable, there is a proposal to reduce tax for small companies
with a turnover of up to Rs 50 crore to 25%. About 67 lakh companies fall in
this category. 96% of companies to get this benefit.

The government proposes to reduce basic customs
duty for LNG to 2.5% from 5%.

Proposal to have a carry-forward of MAT for 15
years.

Holding period for long-term capital gains tax on
immovable property reduced from 3 to 2 years; base year indexation shifted from
1.4.1981 to 1.4.2001.

Capital gains tax to be exempted for persons
holding land from which land was pooled for creation of the state capital of
Andhra Pradesh.

The limit of cash donation by charitable trusts
is reduced to Rs 2,000 from Rs 10,000.

Existing rate of tax for individuals between
Rs. 2.5- Rs 5 lakh is reduced to 5% from
10%.

All other categories of tax payers in subsequent
brackets will get a benefit of Rs 12,500.

10 % surcharge on individual income above Rs. 50
lakh and up to Rs 1 crore to make up for Rs 15,000 crore loss due to cut in
personal I-T rate.

15 surcharge on individual income above Rs. 1
crore to remain.

Rate of growth of advance tax in Personal I-T is
34.8% in the last three quarters of this financial year.

The Income Tax Act to be amended to ensure that
no transaction above Rs 3 lakh is permitted in cash.

Infrastructure
and Railways

ØA total
allocation of Rs. 39,61,354 crore has been made for infrastructure.

ØFor
transportation sector as a whole, including rail, roads, shipping, provision of
Rs. 2,41,387 crore has been made in 2017-18.

ØTotal allocation
for Railways is Rs. 1,31,000 crore.

ØNo service
charge on tickets booked online through IRCTC.

ØCorpus of Rs.
1 lakh crore for five years for passenger safety.

ØRailways to
partner with logistics players for front-end and back-end solutions for select
commodities.

ØRailways will
offer competitive ticket booking facility.

ØNew Metro rail
policy will be announced with new modes of financing.

ØRs. 64,900 crore
allocated for highways.

ØA DigiGaon
initiative will be launched to provide tele-medicine, education and skills
through digital technology.

ØTrade
Infrastructure for Export Scheme (TIES) will be launched in 2017-18.

ØA strategic
policy for crude reserves will be set up.

Agriculture, Poverty and Health

A sum of Rs. 10 lakh crore is allocated as agricultural
credit. Farmers to also benefit from 60 days interest waiver announced on
31 Dec 2016.Agriculture sector is expected to grow at 4.6%.

Long Term Irrigation Fund already set up in
NABARD to be augmented by 100% taking the total corpus to Rs. 40,000 crores. A
dedicated micro irrigation fund will be set up for NABARD with Rs 5,000 crore
initial corpus.

National Agricultural Market (e-NAM) to be
expanded from 250 markets to 585 APMCs. Assistance up to Rs. 75 lakhs will be
provided to every e-NAM.

Dairy processing infrastructure fund wlll be
initially created with a corpus of Rs. 2000 crore.

Over Rs 3 lakh crore will be spent for rural
India. MGNREGA to double farmers' income.

MGNREGA allocation to at Rs. 48,000 crores in
2017-18.

Technology will be used in a big way to ensure
MGNREGA works.

During 2017-18, five lakh farm ponds will be be
taken up under the MGNREGA.

The government targets to bring 1 crore
households out of poverty by 2019.

The government proposes to complete 1 crore
houses for those without homes.

Total allocation for Rural, Agriculture and Allied
sectors is Rs. 187223 crores.

Financial sector

ØFDI policy
reforms - more than 90% of FDI inflows are now automated.

ØForeign
Investment Promotion Board will be abolished.

ØAn expert
committee for creation of an operational and legal framework to integrate spot
market and derivatives market in the agricultural sector, for commodities
trading. e- NAM to be an integral part of the framework.

ØA new ETF with
diversified CPSE stocks and other Government holdings will be launched in
2017-18.

ØShares of
Railway PSE like IRCTC will be listed on stock exchanges.

ØBill on
resolution of financial firms will be introduced in this session of Parliament.

ØRevised
mechanism to ensure time-bound listing of CPSEs.

ØComputer
emergency response team for financial sector will be formed.

ØRs 10,000
crore for recapitalisation of banks will be providedin 2017-18.

ØA Mission will
be set up with a target of 2,500 crore digital transactions for 2017-18 through
UPI, USSD, Aadhar Pay, IMPS and debit cards.

ØThe maximum
amount of cash donation for a political party will be Rs. 2,000 from any one
source. Political parties will be entitled to receive donations by cheque or
digital mode from donors. An amendment is being proposed to the RBI Act to
enable issuance of electoral bonds .A donor can purchase these bonds from banks
or post offices through cheque or digital transactions. They can be redeemed
only by registered political parties.

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